Law Society submissions
Securities Commission should not interfere with lawyer independence
In September the Law Society made further submissions to the British Columbia Securities Commission, opposing the Commission having the power to restrict or prohibit the practice of lawyers before it - matters of lawyer discipline that properly fall to the Law Society: see Submissions to the Securities Commission Re: New Proposals for Securities Regulation (September 25, 2002) on the Law Society website (www.lawsociety.bc.ca).
The BC Securities Commission put forward various proposals for reform earlier this year, including a proposal giving the Commission scope to exclude professionals, including lawyers, from practice before it. The Commission's current proposal is:
The Commission can prohibit a professional from practising before the Commission if the professional has intentionally contravened the securities legislation, or has intentionally assisted others to do so.
As noted in the last Benchers' Bulletin, the scope of the provision proposed by the Commission was originally even broader - purporting to authorize the Commission to assess the competence of lawyers appearing before it.
The Law Society is pleased to acknowledge that, in response to submissions, the Commission has narrowed the proposed provision. Nevertheless, the Commission still wants the power to prohibit a lawyer from practising law in some circumstances.
The Securities Commission proposals suggest that professionals, including lawyers, sometimes engage in behaviour that negatively affects the integrity and efficiency of the capital markets. The Commission wants authority to order that a professional, including a lawyer, not appear before it or prepare documents that are filed with it - powers similar to those held by the US Securities and Exchange Commission.
A lawyer, of course, is not immune from the Commission's existing enforcement and penalty powers, in the same way that a lawyer is not, simply owing to his or her professional designation, immune to prosecution under the Criminal Code for any acts that may violate the criminal law.
In the Law Society's view, however, the proposal goes well beyond the scope of the powers afforded to the Commission by the Securities Act, and falls within the powers given to the Law Society by the Legal Profession Act to regulate professional conduct. The language of the proposed legislation is overly broad and could result in the imposition of professional sanctions on a lawyer based on personal conduct that falls outside the practice of law, such as in the lawyer's capacity as a director of a public company.
As lawyers are required to protect information that is subject to solicitor-client privilege, they would be prohibited from disclosing such information to the Commission even if it were necessary to defend themselves against a charge they have "aided or abbetted the contravention of the Securities Act or Regulations." (By contrast, such privilege is maintained in proceedings under the Legal Profession Act.)
One of the most compelling reasons against the proposal is that it would be detrimental to the public interest - by compromising the independence of the legal profession in BC. Making a lawyer subject to potential discipline by a tribunal before which the lawyer appears on behalf of a client would wrongly interfere with the vigorous pursuit of the client's interests. Clients must be entitled to have their cases placed before a tribunal in the best way possible, by counsel of their choice, provided that counsel is a Law Society member in good standing.
In essence, the issue is that an agent of the state ought not to determine whether a lawyer can practise in a given area of law. In order to protect the independence of lawyers from the state, that determination must be made by a body independent of the state.
The Law Society has the statutory responsibility to govern the conduct of lawyers. It maintains a complaints and discipline process to which all BC lawyers are subject, and there are a range of penalties that may be imposed on a lawyer for misconduct, conduct unbecoming or breach of the Act or Rules, including, in appropriate cases, the power to suspend or disbar a lawyer from practice.
The Society investigates all complaints received concerning the conduct of lawyers practising in the securities law area, including those complaints that come from the Commission or from media reports.
These incidents are few, and there appears to be no pervasive problem with respect to the conduct of lawyers dealing with the Commission. The Law Society has asserted it is unnecessary to impose any other authority over the conduct of lawyers to ensure the proper regulation of securities practice.